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Greentown Management Holdings Company Limited's (HKG:9979) Earnings Are Not Doing Enough For Some Investors

Simply Wall St · 3d ago

When close to half the companies in Hong Kong have price-to-earnings ratios (or "P/E's") above 13x, you may consider Greentown Management Holdings Company Limited (HKG:9979) as an attractive investment with its 9.7x P/E ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/E.

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While the market has experienced earnings growth lately, Greentown Management Holdings' earnings have gone into reverse gear, which is not great. The P/E is probably low because investors think this poor earnings performance isn't going to get any better. If this is the case, then existing shareholders will probably struggle to get excited about the future direction of the share price.

View our latest analysis for Greentown Management Holdings

pe-multiple-vs-industry
SEHK:9979 Price to Earnings Ratio vs Industry January 8th 2026
Keen to find out how analysts think Greentown Management Holdings' future stacks up against the industry? In that case, our free report is a great place to start.

Does Growth Match The Low P/E?

There's an inherent assumption that a company should underperform the market for P/E ratios like Greentown Management Holdings' to be considered reasonable.

If we review the last year of earnings, dishearteningly the company's profits fell to the tune of 45%. The last three years don't look nice either as the company has shrunk EPS by 18% in aggregate. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.

Turning to the outlook, the next three years should bring diminished returns, with earnings decreasing 0.3% each year as estimated by the six analysts watching the company. With the market predicted to deliver 14% growth each year, that's a disappointing outcome.

In light of this, it's understandable that Greentown Management Holdings' P/E would sit below the majority of other companies. Nonetheless, there's no guarantee the P/E has reached a floor yet with earnings going in reverse. Even just maintaining these prices could be difficult to achieve as the weak outlook is weighing down the shares.

What We Can Learn From Greentown Management Holdings' P/E?

We'd say the price-to-earnings ratio's power isn't primarily as a valuation instrument but rather to gauge current investor sentiment and future expectations.

As we suspected, our examination of Greentown Management Holdings' analyst forecasts revealed that its outlook for shrinking earnings is contributing to its low P/E. Right now shareholders are accepting the low P/E as they concede future earnings probably won't provide any pleasant surprises. Unless these conditions improve, they will continue to form a barrier for the share price around these levels.

There are also other vital risk factors to consider and we've discovered 2 warning signs for Greentown Management Holdings (1 is potentially serious!) that you should be aware of before investing here.

If these risks are making you reconsider your opinion on Greentown Management Holdings, explore our interactive list of high quality stocks to get an idea of what else is out there.